The Glorious Lie of the Indie Bubble

Grab your laptops and head for the hills! The bursting of the great indie game bubble is upon us!

Surely by now you’ve heard about the surfeit of worthwhile games available on Steam and elsewhere, the Kickstarter fatigue that’s stricken gamers and thing-purchasers around the world, the mounting competition in terms of rising quality and sheer numbers, and the logic-defying, margin-erasing pay-what-you-want model of all the indie game bundles nowadays.

I mean, it’s clear from these factual observations that not only will there be not enough money to go around, but that some deserving games will get lost in the shuffle, right? Surely that state of affairs is tantamount to a massive bubble bursting!

Just picture it: One minute you’re happily game dev-ing away, minting thousands of dollars at a time, then BANG! Thick, viscous indie bubble juice everywhere!

But hold on – don’t break out those ponchos just yet. The idea of the indie bubble itself is more than just understandable paranoia in a world where change comes fast and the threat of disaster is a constant.

It’s also a fantastic opportunity to take a deeper look at the state of this indie thing of ours and discover, in detail, how indie game developers are going to fare in the years to come.

This Is Not the ‘80s

In the 1980s, the video game market crashed thanks to a spate of cheaply-produced, poor quality games churned out to suck as much money as possible from an unwitting populace taken with the novelty of the medium – only to be rescued by the coming of Nintendo’s flagship system and their fierce commitment to quality. This was a true games bubble, and when it popped, it almost took the entire industry with it.

Today’s indie scene could not be more different. What’s the main concern now? There are not only too many games, but from a developer’s point of view, the quality of the competition is getting too high! Far from exhausting consumers’ patience with our products, they can’t get enough of them because there is always something worthwhile to play.

But ah, of course – there’s that Kickstarter fatigue. Yet Kickstarted games show no sign of going away. If anything, Kickstarter fatigue is an observation about how the nature of crowdfunded games get covered in the press has changed.

But the Steam sales, and Humble Bundles, and Indie Royales of the world – they’re driving down the price of games! Surely they aren’t innocent in perpetuating the indie bubble!

Again, look to recent history for perspective: In the old model of the ‘90s, you would spend anywhere from $40 to $70 on one of the few new releases that month, and proceed to play the crap out of it because A. the average game cost much more then than today, and B. since fewer games were released, it made sense to maximize every game’s replay value as much as possible.

Today, that model is also inverted. The amount of quality indie games that come out every month is so mind-boggling, and the average price is so much lower than in the ‘90s, that it makes total sense to buy a few and spread your gaming hours around. Plus, because modern titles generally take much less time to complete than ones from decades ago, gamers have more excuses for buying more games.

Far from this being a destructive trend – gamers literally have to spread their money around to more developers if they want to play everything worth playing!

Nay, I Say

“A lot of good titles won’t ever get that press. They just can’t. There’s not room… The gaming press knows that gamers only want to hear about so many indies. Soon, they’ll start picking who lives and who dies.”
–Jeff Vogel, from “Marketing, Dumb Luck, and the Popping of the Indie Bubble“

“Now hold on,” I can feel you naysayers thinking. “In Vogel’s piece, he talks about the ‘indie bubble’ mainly being a sharp decline in the amount of coverage the gaming press grants to indies. What if *this* changes? What then?”

Say this happened. What would gamers do? Would everyone go back to playing only console games and mainstream PC titles? Would IndieCade, the IGF, the Indie Fund, and all the indie-centric institutions that have been popping up just go away?

Maybe, this is what was put in motion years ago, and just maybe, it’s the direction that the industry as a whole is traveling in. Maybe what some people perceive as ‘the indie bubble’ is just a gradual re-orienting of the industry to a new normal, where individuals and small teams release games that do battle on the charts with multi-million dollar productions made by hundreds.

Harder, But Still Worth It

Is it hard to become a Hollywood screenwriter? Is it hard to get a book deal? Is it hard to become a professional musician? Yes, of course it is – but the people in charge of finding the next hit are always scouring the talent pool for the next thing to blow them away.

Just like how games writers are always looking for a great game to discover. Just like how gamers are always looking for the next game to thrill, delight, and move them like never before.

It is hard to be an indie game developer, and it will get harder. Better and easier tools are leveling the playing field, collaboration is easier than ever, and the quality of your competition will never stop rising.

That’s fine. Get used to it. Keep making, iterating, improving. But know that the world will always be hungry for amazing, personal experiences – the kind that indie developers do best.

Folks tend to talk about the indie bubble in terms of a crash. That’s a strawman. That isn’t what Jeff Vogel is saying, nor is it what historically tends to happen. What we are seeing is a maturing market. The impact is instead:

A) Fewer small developers make a living wage
B) Larger, better organized groups absorb the majority of the market growth.

This dynamic can exist in a *growing* market and does not require a ‘crash’ to wreck the livelihoods of indie developers.

The factors are simple:

1) Older opportunities for distributing indie games to large number of players cheaply are diminishing. Mobile is a good example of this.

Now: Most distribution on mobile is currently paid, which favors large companies or companies that have games with an LTV > $4. (During the holidays, cost of acquisition apparently topped $7). Note that this is happening despite dramatic growth of the market overall.

2) Crowded markets: You release into a crowded market and don’t get the attention, distribution or sales you may have previously expected.

Then: You release a game in an underserved genre like platformers, space games, adventure games and people desperate for those titles buy your games because very few people are serving their needs.

Now: Most of the niche genres have several (if not dozens) of high quality titles with solid brands and years of press. I would expect the median revenue for a Steam game for example to start declining.

3) The quality bar is rising. With more competition comes higher production costs.

Then: You could release a game with solid gameplay and okay graphics and do quite well. Less competition and easy distribution lets you get away with a lot.

Now: Costs are escalating. At PAX this year, it was fascinating to notice that the gameplay was surprisingly conservative, but the visual quality had increased substantially. People are getting caught up in the production cost curve and investing more in art. I’d expect profits to also start declining. Where a moderate success might have cost 100k to make and paid out 500k, you start paying 200k and making 300k. That may seem like not a big deal. However, each success needs to pay for multiple failures if you are trying to do this long term (Not all your projects will be hits). So where you might have been able to pay for 5 experiments previously, now you can pay for half of an experiment. (Maybe you’ll turn to publishers to make up the rest. So much for being indie)

Then: You release a game and slowly improve it over a year. Money comes in for the next two years.

Now: The hot new thing is out a month or a week after you release. Your income from that game you worked on for 3 years falters after 6-8 months.

These are trends. Averages. Not all these factors are obvious in every game. However, the basics are really straight forward: There will of course be hits, most indies will make less money, most hits will not be made by indies.

Now, these declining averages are going to be hidden by several things. And because people like spectacle over data, they’ll often find themselves intentionally ignoring the trends:

– Hits: There will be hits. These are sexy and exciting. We have an entire industry devoted to making them seem sexy and exciting. However, just like how there is always a famous child actor, it doesn’t’ change the reality that being a child actor sucks for 99.99% of all child actors. Just because someone else had a hit does not mean you have a sustainable business model.

– Low barriers to entry. Easy dev tools plus helpful communities plus overfilled game dev schools means the flow of people making games is only going to increase. Most folks are young, have made 0-1 games and know nothing of business. The blind excitement is infectious. I’d expect a huge boom in hobbyist games just as there are hobbyist novelists. The overwhelming majority will make $0-$100. Game development becomes a hobby and less a profession. Like knitting.

– Promises of new platforms: Platform builder love promising developers that they’ll make them the next big star. They need developers early on to add value so that customers will adopt the platform. They’ll spend major money and be very willing to promote success stories in order to get devs to jump on their bandwagon. The successes are often smaller than suggests “Critics love it” for example does not mean the game made enough to fund the next game. And often the opportunity is gone by the time you hear about it.

Current ‘hot’ markets and where they are in the maturation life cycle:

Maturing markets:
– Mobile
– Steam

Opening markets
– New consoles: There’s ~1 year window here. Then the successful platforms will get crazy greedy. Unless you have existing leverage or relationships. It is the console circle of life.

Dying markets
– Flash portals

Embryonic markets: These are places that no one is making any money because there is no meaningful platform penetration. No customers = no money. Some are desperate for content, but it is a chicken and egg problem. Revisit each year to see if they’ve grown.
– HTML (Mostly massive fragmentation)
– Microconsoles
– Virtual reality

So the old strategies don’t generally work. The opportunities are shorter lived. It is never impossible to succeed, but the modern reality for small indies is much harsher than it has been in the previous 5 years.

All the best,
Danc.

Hi there, I'm Ben Serviss. I'm a software engineer, game designer and producer. Check out Dashjump for more on my game projects.